In today’s Internet Retailing interview, we speak to Rakesh Aggarwal, who founded beauty site Escentual.com, about how he has grown his business in its 12 years of trading – and what effect football has on its sales.
It started life as the online arm of a Cardiff beauty shop, an operation based in founder Rakesh Aggarwal’s parental garage. But 12 years on, Escentual.com is on course to turn over £12m.
It was back in 2000, close to the bursting of the dotcom bubble, that Aggarwal, recently graduated from an MBA at Cardiff University, decided to find a way his family beauty business could trade online. He’d been introduced to a web developer through a family friend and decided there to explore ways of taking premium beauty products, that at the time were mostly available through department stores, to new customers through the internet. Because Aggarwal’s family business had been selling through bricks and mortar stores for more than 30 years, he had a way in to a market that was more difficult to enter.
“The idea was,” he says, “that we would sell products that at the time were harder to find and weren’t available to people who weren’t near a very good department store. I think we’ve built from there, over time.” It was important, he says, to reassure suppliers and brands that, “we would treat their brands with the care they would hope we would, and make sure the final mile – us delivering to the consumer – met with expectations.”
The first order went out around two days after the site went live in November 2000, and for the first six years the business grew slowly and organically until it got to the point where it could invest in a dedicated fulfillment centre with pick and pack technology. Today it employs 16 full-timers as well as part-time picking and packing staff. Year-on-year traffic to the site is currently up by 118%, says Aggarwal and turnover of £12m is currently forecast for the current financial year.
“I’m keen the business grows so the people within it can flourish. Now we’ve got to a certain level it’s important they see it growing so they see their future in the business,” he says. To that end, recent work has focused on search, including areas such as SEO and PPC as well as above-the-line PR.
The key to success so far, says Aggarwal, has been to focus on customer service. In that he follows advice from his grandfather, who had been a prominent businessman in Kenya. “The adage my grandfather used to tell me was: quality, service and satisfaction. Make sure everything you do is of highest quality and offer customer service that makes sure the customer is satisfied. I’m a real believer in customer satisfaction.”
Today Aggarwal is more likely to be monitoring that satisfaction on social media. “I scour the internet every morning and night for any kind of potential reviews of our organistion,” he says. “Touch wood every single one of them is positive, but it hurts me to the heart if I see a negative comment or review from a customer and I’ll pick up the phone personally to a customer and resolve any issues. We’ve worked so hard and if anything does go wrong we need to get that resolved very quickly.”
Aggarwal says he finds Twitter a useful way to stay in touch with customers, even though it’s no longer he who answers the phones. “The impt thing is we don’t set a return on investment on our social media activity – we just use it as a way of allowing our customers to gauge our personality, to interact with us,” he says.
He’s also keen to stay ahead of other advances in technology. In the future, he believes, augmented reality will be “huge in our industry”. Apps that can emulate department store service are on the agenda, while new overseas markets are also in Escentual’s sights. By the end of next year Aggarwal expects to have a multilingual, multicurrency website. “At the moment we want to focus on the UK – but we do see the potential of international. Our hope at the moment is to get things right in the UK and build the teams. Then we’ll expand to markets such as Germany, France, Scandinavia.” After that, the world beckons. “There’s huge potential and we’re seeing uplifts all the time with people being prepared to shop internationally,” says Aggarwal.
But at the same time he’s also on the lookout for other, less predictable opportunities. Who would have thought, for example, that business would be up during Euro 2012 England matches? But they were, according to Escentual’s analytics, which showed sales rise by 20% during England’s opening drawn match against France. At the same time online traffic was up by 13%. Why? It seems that as 11m Britons were watching the football, many others were shopping online. “It seemed to indicate that,” says Aggarwal, “while men are watching football maybe their female partners are finding distrctions, going on the internet to buy themselves little luxuries. It was mini-luxuries where we had the uplift – mascara, lipstick. Not big items but feelgood purchases.”
The findings were borne out against both for Denmark v Portugal and Netherlands v Germany, with online traffic up by a fifth and sales also on the rise. Now the team will be monitoring Wimbledon to see what the tennis effect is. “Everyone knows the weather and external factors have a huge influence on internet retailing, while we also had a bumper weekend over the Jubilee. There’s been some interesting insights that have come out from all this activity. During football and bank holidays we can see big shifts which even for small businesses like us can make a big difference.”
SPEAKING FROM EXPERIENCE
Rakesh Agggarwal’s advice for others starting out
If you can show passion through your website, using social media, giving personality to both your website and your offering and the way you deal with your customers. That is what the consumer is looking for now. They have ebay, amazon, mega stores but now turning to more personalised, more expert services.
If you can find a niche where you have expertise there’s definitely space for new entrants.
Don’t be too ambitious, take it slowly, always keep the customer in mind. I’m a real believer in customer satisfaction.
Supplier relationships are one of the key elements of making yourself a successful retailer.